Federal Reserve bars Citigroup, 4 other big banks from raising dividends and buying back stock + MORE Mar 26th

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TORONTO – Bargain-hunters looking for value may want to consider investing in consumer stocks this year, as competition in the retail sector continues to intensify amid a lower loonie and more entrants vying for customers in an already crowded market, according to CIBC.
In a note Wednesday, CIBC equity analyst Perry Caicco said that while the bank (TSX:CM) generally recommends investors focus on either “high-growth companies or more traditional companies where management is actively driving value,” it sees long-term underlying value in retail and consumer stocks.
“As quarters unfold and as the challenges become apparent, (price/earnings) multiples are likely to decline,” Caicco wrote.
“But underneath it all, certain transition activities will begin to bear fruit and there could be some great bargains again among these stocks.”
The note points out that the consumer staples index on the Toronto Stock Exchange has risen 53 per cent in the past two years, while the consumer discretionary index has gone up 67 per cent, mainly due to mergers and acquisitions and a number of successful real estate spinoffs…

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WASHINGTON – Citigroup cannot raise its dividend or buy back its own stock because it needs better plans to cope with a severe recession, the Federal Reserve ruled Wednesday, a disappointing reversal for one of the nation’s largest banks.
The Fed also rejected the capital plans of four other big banks as part of its so-called “stress tests,” an annual check-up of the nation’s 30 biggest financial institutions.
The Fed said that the capital plans of Citigroup fell short in some areas, including its ability to forecast revenues and losses in parts of its global operations, should they come under economic stress. Citi had asked the Fed’s permission to buy back $6.4 billion in shares through the first quarter of next year, and to raise its dividend to 5 cents each quarter.
Citi CEO Michael Corbat said the company was “deeply disappointed” by the Fed decision. The dividend and buyback would have been a “modest level of capital” for shareholders, and Citi still would have exceeded requirements for its financial health, he said in a written statement…

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